Last week at the D conference, I spoke to Ann Moore, the CEO of Time Inc.
She has a tough task, transforming Time Inc’s stable of magazines in the digital age. The company has gone through a major round of layoffs, and some major changes at Time magazine. On the online side, it has finally broken from the shackles of AOL, and is now in charge of its own online/digital presence, revenues and dealmaking, as Moore elaborates below. For her, SI.com is the example she wants to emulate within other magazines/brands.
Rafat Ali: I know there was a comment you gave at one of the conferences recently, that there is a real business here in terms of the online part. What did you mean by that?
Ann Moore: I think what happened was the tipping point happened last year. For the first time ever, significant ad dollars showed up online, so the rest of us could go after it. We have been laying in wait and I think that is what we learned last year. We added significant top line and bottom line growth to our biggest sites that have made the crossover to digital, so the newsweeklies primarily, Sports Illustrated, and the business books. Sports Illustrated is a great example. We actually added up a digit on top and bottom line growth. You have to pay attention to top line growth. You cannot save your way into a transition. You have to learn how to grow top line revenues. I think Sports Illustrated will add about 18 percent to their bottom line this year. We added about 13 percent last year. That is significant. Those are meaningful numbers.
Rafat: You did some small acquisitions as well.
Ann: We did some small acquisitions and all of those have been good — I really give an A+ to the SI team and [President of SI Digital] Jeff Price. We added FanNation to the SI website and it exceeded our expectations. We bought Golf.com, which we have folded into the Sports Illustrated franchise, and it exceeded our expectations. He pretty much has a good chit with me in his back pocket because so far he is two for two. You could expect to see something else grow with him.
Rafat: How do you translate what has happened with Sports Illustrated into Time.com and others?
Ann: Well, Time.com, same thing, all the newsweeklies and People.com. Look for People.com coming out strong right now. The first week of May was the first time it actually had more uniques than TMZ. TMZ.com has that AOL fire hose perfectly aligned. It has always beaten us on uniques, although People.com has got to-die-for stickiness. It has got 71 page views per visit. More after the jump….
Rafat: How come TMZ gets all the buzz?
Ann: Well, because TMZ is a joint venture between Warner Bros. and AOL, so it is an AOL-owned property, but you wait and see.
Rafat: Do you want to synergize with it ultimately?
Ann: Well, in the case of People.com, it is a big enough brand and a powerful enough brand that it should be everywhere and it is everywhere. We had People behind the wall at AOL and in fact we were AOL’s content provider in the celebrity news area. We only took it out from behind the wall last summer and we only have all our handcuffs off April 1 of this year. So, only since April 1 have people been free to go out and make other content partnerships. That is why I say keep a close eye on People.com. You are going to see it explode, 392 million page views in the month of February.
Rafat: The subscription model that was there is gone.
Ann: Gone, gone. It is advertising only and it is working beautifully. That is why I said there is a real business here. We did prove to ourselves that you absolutely have a business. Remember this: We amortize our offline editorial costs. A writer for Sports Illustrated, Tom Verducci, our baseball writer for Sports Illustrated, he writes 50+ columns for the magazine, but he writes another 60+ columns for SI.com. That is why the margins on our dot-com businesses are so high. We have 3,500 journalists who write for the print products. The work they do on the dotcom makes for very high margins on the online businesses.
Rafat: Let us talk about Fortune; a lot of news recently was for Portfolio launch. What does Fortune need to do in your view to stay relevant if it is not now.
Ann: Well, Fortune is part of the CNNMoney.com family. We took all four business books and we combined them into a joint venture with CNN and launched CNNMoney.com last year. Now, we have worried about how Fortune would fare under that logo. You can get there by typing Fortune.com and it takes you there, but they are part of the CNNMoney.com site. I think it was answered in October. When they were on their own, Fortune.com, an editorial section like the World’s Most Powerful Women Summit could get 1.5 million page views. When they are a part of CNNMoney, they can get — I cannot remember the number, but it was something huge. I remember the Business 2.0 number was 40 million instead of 4 million for the year.
There is such power in collaboration by putting the business books together with the CNN firehouse and being the content provider for CNN financial information. That has worked very well for both sides and in fact if you did the same interview with Phil Kent [CEO] at Turner, he would tell you how thrilled he was with the CNNMoney partnership with us. We split the profits from that 50/50. It is a significant check that goes for both of us. We are adding more than 20 percent to the bottom line of Fortune, Money, Business 2.0, and Fortune’s Small Business. We added real time stock to it for the first time this year and all the original content. I think it is one of the best financial sites on the Web. I know that they have some ambitious plans. You are going to see some additional improvements there in the course of the year.
Rafat: You just launched MyRecipes.com. What is the strategy there and why do you think Office Pirates did not work out versus MyRecipes.com.
Ann: They are very different because Office Pirates is an original idea. It was going to be edgy web entertainment and you know what? It kind of worked if you wanted something small and edgy. You have to look at the scale of Time Inc. and understand why we decided to close it because it was never going to be as big as SI.com big. I loved the experiment because we got the talented Mark Golin who now edits People.com. This fear of failure…You have to try a lot of stuff and some things work and some things do not work. It just was not going to have the scale to make it interesting enough. We were rationalizing the portfolio. We were divesting all the little tiny things. If you put Mark Golin on Office Pirates, you could make this amount of money. If you put Mark Gilan on People.com, you can make a huge amount of money. So, we switched Mark over and we cut OfficePirates.
MyRecipes.com is the Kitchen Assistant that we built behind the wall for AOL using all our 25,000 recipes. We have deep recipes and food content of the Time Inc. magazines between the Southern Progress titles. Cooking Light
for Life is the number one food magazine. Sunset, In Style, Real Simple, we all run recipes. We built that database for AOL called Kitchen Assistant and we digitized all our tested recipes. We retained ownership of all that content. Now that we are not behind the wall, we took it out and we have now re-launched it as MyRecipes.com. We have deep, deep content in home, garden, all the women service, and we might launch things there.
Rafat: You’re is now competing with Scripps, in some senses.
Ann: Yeah, yeah, and I love them. They are very strong because they have the cable network. They have got the fire hose with a good network and HGTV. Yes, there would be a lot of synergy between I think our print content and Scripps. They do not own the content. They got great distribution. We own the content. That would be a good marriage. We like them.
Rafat: Time Inc. being bought by Scripps?
Ann: Or Time Inc. buys Scripps.
Rafat: That would be be tough to do.
Ann: Well, they are controlled by a family now, but you can see us doing partnerships. It is not just them. If you are a content owner like we are, we got to do partnerships with everybody, with Scripps, with AOL. We have partnerships with Microsoft, NBC Sports and Sports Illustrated.
Rafat: Is the internal pull to first partner with Time Warner properties?
Ann: No. Here is the strategy. First, build the best of product. Differentiate it. Second, build the big audience and by that I mean you need partnerships with everyone. Then third, worry about monetizing it, but you got to have a big audience to make money on the web because the CPMs are low. I have said this publicly: The magazine models is a beautiful model because you got high margins; two revenue streams, the consumer pays and the advertiser pays; beautiful cash flow, you get the money up front. The average reader of Sports Illustrated delivers about $118 to the bottom line in Time Inc. The average very engaged user of SI.com can generate about $5 in advertising contribution. I need many more online viewers to equal one magazine reader. That is why you have to go for big volume and that is why you got to have partnerships. You do not do exclusives with anybody. Yes, we would love to partner with Scripps, but, yes, we love to partner with Microsoft and Google and Yahoo. I think we have partnerships with everybody. Our content has to be everywhere. Probably the greatest example of that is the SI Swimsuit issue.
Rafat: I got a lot of e-mails from your PR team on that one.
Ann: It is the most profitable single issue of any magazine probably in the world, I bet. Seventy million people saw it, 500 million hits on the site section last year. It is going to be bigger this year because we could see the first month traffic this year was almost double what we did last year. It was four of the top 10 downloads in iTunes. There is a VOD on Time Warner cable. TNT had a swimsuit show, I mean it is a phenomenon. They have basically taken an asset that is 40 years old, and it is acting like a young growing asset now. It is growing 17 percent a year.
Rafat: Time Inc. did a bunch of layoffs last year and early this year and you are hiring on the digital side. How do you balance and how do you keep the morale up on this side versus that side?
Ann: It is tricky and we have had people cross over too, but I think it is tough in a transition. It is hard to do it. It is hard on the staff, it is hard on the management that has to execute it, but this is something that we have to do. It is never easy to say goodbye to colleagues you worked along side of, but guess what, we have to do this for the ongoing concern. We have to do this to ensure that Time Inc. is here for the next 80 years. I am very proud of the editors because we did a complete editorial process review and we recognized that information is gathered a different way. We did so many smart moves. We are holding writers more responsible and accountable for what they write. We are not holding their hands so much and looking over their shoulder and over-editing them. So, in odd way, go interview the writers. I think they are happy. They are a lot happier.
Rafat: Time Magazine in five years, where do you see it?
Ann: I think it is going to be strong. I think Time.com is going to be our breaking news — it has rolled up into CNN.com. I think one of my priorities is to make sure we build enough fences around the journalistic part of our company, that we protect it and nurture it. Real fact-based news is very important for the country, for our company, for our democracy, for your business. You are not going to want the world to just run on user-generated content. We need to protect real journalism, and it is very much in our DNA. It really does not matter where you work in the company. If you work on the service brand or you work in Birmingham, I think we all feel very proud and protected by the journalistic heritage of the company. I think Time Magazine will be around. I give really high marks to Rick Stengel and the editor, John Huey, for stepping up and making changes there, for the business team that, really, we did some very gutsy things. I waited nine years for them to move to Friday delivery because I had done that at People 9 or 10 years ago and it worked great. People have more time to read on Friday. Now, Rick is changing the product to be more reflective of what consumers need. We are not going to be breaking news in a weekly magazine anymore. You guys do that on the web, but we are going to interpret the news for you and we still are going to do in depth reporting of news that you just do not have time to read online. We will bring it to you Friday when you have more time to read it.